Declared Value

What is declared value?

Declared value is the monetary value a shipper assigns to a shipment when a bill of lading, air waybill, or other shipping document is issued. This value is used to determine the liability or compensation amount in case of shipment loss, damage, or delay. Declaring a value is crucial for ensuring appropriate coverage and is often higher than the actual market value to include potential profits lost due to damage or delay. Insurance declared value means the coverage provided based on this declared amount, offering financial protection for shippers.

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How is declared value used in shipping?

In shipping, the declared value of a shipment influences the level of carrier liability and the cost of shipment insurance. When goods are shipped, the declared value must be clearly stated on the shipping documentation. Declared value in shipping is a critical factor for determining insurance premiums and carrier liability limits. It essentially sets the maximum compensation amount the shipper can claim in case of an incident.

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Why is it essential to declare shipment value accurately?

Accurately declaring the value of a shipment is crucial because it directly impacts the insurance coverage and compensation one can receive. Under-declaring the value can result in insufficient coverage and potential financial losses, while over-declaring can lead to higher shipping costs due to increased insurance premiums. Insured declared value ensures that the shipment is adequately covered, balancing cost against risk, and providing shippers peace of mind and financial protection.

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How do shippers calculate the declared value for insurance?

Shippers calculate the declared value for insurance based on the invoice cost of the goods, plus any additional expenses incurred up to the point of delivery. This can include shipping costs, taxes, and an additional percentage to cover potential profit or other intangible losses. The specific formula can vary depending on the insurance provider's policies and the nature of the goods being shipped. Market conditions, the sensitivity of the goods to time or environmental factors, and the destination country’s regulations may also affect how value is declared.